One month after Morgan Stanley said it was leaving the Protocol for Broker Recruiting, UBS says it will too.
“As our operating model is more focused on retaining our existing advisors than recruiting to grow our business, UBS will no longer be subject to the Protocol effective Friday, Dec. 1, 2017,” said Tom Naratil, head of the firm’s Wealth Management Americas unit, in a memo obtained by ThinkAdvisor on Monday.
The wirehouse firms agreed to the Broker Protocol in 2004 to facilitate the movement of registered representatives without violations of non-solicitation clauses or Securities and Exchange Commission Regulation S-P, which aims to protect client privacy. The protocol has since been signed by over 1,600 firms seeking to avoid legal entanglements tied to recruiting.
Danny Sarch, head of Leitner Sarch Consultants, says that broadly speaking, “It’s a new world” for advisors and clients.
“We could see a wave of UBS departures,” he explained—adding that this is generally what happened a few weeks ago at Morgan Stanley. “Those [advisors] planning to go before the end of the year are going to make a strong effort to leave soon—before Friday.”
Will more firms leave the protocol? “If you think you will be a net hirer and not a [net] loser, you would stay in [it],” Sarch said.
The recruiter says that while UBS’ departure creates headaches for advisors, it really hurts clients—who could have a hard time contacting advisors after they have left firms no longer in the protocol.
“Ultimately, issues will end up in courts or in arbitration,” he explained. “But we are not in 2004. Advisors text clients and keep client contact information on their phones … It’s all new.”
Others, though, don’t see significant change tied to the departure of a second wirehouse firm from the recruiting arrangement.